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Starbucks aims to triple China revenue by 2022

SHANGHAI

Reuters

Published May 16, 2018Updated May 16, 2018

Starbucks Corp is looking to more than triple its revenue and almost double its store count in China over the next five years, doubling down on the market as traffic growth comes under pressure in the United States.

The U.S. coffee chain, which recently raised $7.15-billion in a deal with Néstlé SA, aims to have 6,000 stores in the country by the end of 2022, it said in a statement. It has around 3,300 stores in 141 cities in China currently.

Starbucks dominates China’s coffee scene, although it is seeing more competition from smaller rivals, similar to how it is coming under pressure from a “third wave” of boutique coffee sellers and cheaper rivals in the United States.

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Late last year it launched its first overseas “Reserve Roastery” - an opulent flagship store with gourmet coffees and a bakery - in Shanghai, where executive chairman Howard Schultz told Reuters store numbers in China would hit 10,000 within a decade, overtaking even the U.S. market.

Starbucks also said it expects to more than double its operating income in China over the next five years, relative to 2017.

It made $3.24-billion in China/Asia Pacific revenue in the past financial year while operating income was $764.8-million, according to calculations by Reuters. A breakdown for China alone was not immediately available.

This month Starbucks struck a deal with Nestle, the world’s largest food and beverage company, to give the Swiss firm exclusive rights to sell Starbucks’ packaged coffees and teas around the world.

Starbucks said the alliance with Nestle would help further extend the coffee chain’s reach and scale throughout China.

“Starbucks will look to leverage the recently announced global coffee alliance with Nestle to provide even more at-home options to the Chinese consumer in the future,” it added.

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